Alcoholism is among the most serious health care problems of our time, affecting approximately 32.5 million Americans at an estimated cost of 136.3 billion dollars annually (NIAAA,1990). Recent epidemiological studies have been consistent in finding a high rate of alcohol problems among those suffering with panic disorder (an anxiety syndrome that involves repeated unexpected panic attacks often complicated by anxiety surrounding the anticipation of panic and agoraphobic avoidance). "Self- medication," a commonly held, but as yet invalidated explanatory model for these findings, suggest that those with panic disorder are prone toward pathological drinking because alcohol is used as a means of coping with unpleasant panic and anxiety symptoms. If validated, this model would have direct implications for the prevention, treatment, and relapse prevention of alcoholism. Unfortunately, little systematic research into the mechanisms underlying co-occurring panic disorder and alcoholism is currently ongoing. In part, this paucity of research reflects the methodological difficulty of directly observing and recording the interaction of alcohol consumption and panic symptoms. We will study the interaction of alcohol consumption and panic anxiety in subjects diagnosed with panic disorder using two novel methods: 1) Using an experimental design, we will provoke panic and administer alcohol in our laboratory, allowing us to directly observe the interaction of these phenomena: 2) we will use a prospective diary methodology to have subjects monitor and record all panic, anticipatory anxiety, and alcohol consumption events, allowing us to directly evaluate naturalistic patterns among these phenomena over time. Experiment 1 tests the hypothesis that alcohol consumption lowers panic challenge responding. Laboratory panic-challenge responding will be compared between panic disordered subjects who consumed either alcohol (medium or high dose) or a placebo. Experiment 2 tests the hypothesis that panic challenge increases the motivation to consume alcohol. Panic disordered subjects will be given an opportunity to consume an alcoholic and/or non-alcoholic beverage, ad lib. in between two challenges of either C02 (panic condition) or room air (no panic control condition). The Diary Study tests the hypothesis that panic attacks and anticipatory anxiety are positively associated with alcohol consumption both between and within subjects over time. For each of 42 consecutive days, panic disordered subjects will record and mail to us a diary detailing their drinking behavior, panic attacks, and anticipatory anxiety. These studies will be the first to directly evaluate the interaction of panic anxiety and alcohol consumption in diagnosed panic disorder subjects. Results will provide new knowledge concerning the nature of, and mechanisms underlying this interaction, as well as provide insight into the patho-development of co-occurring panic disorder and alcoholism.